Tesla Approaches Canada for Lower Tariff on Chinese-Made EVs
In a recent development, it has been revealed that Tesla approached the Canadian government before the announcement of imposing a 100% duty on Chinese-made electric vehicles in the country. According to a government source, Tesla requested a lower tariff on its autos, similar to what it received in the European Union. The EU had softened its stance on Tesla and imposed a 9% tariff on cars made in China, compared to a higher rate for other Chinese EV imports. Tesla’s request to Canada came as a surprise, but the company has not contacted Ottawa since the announcement of the duties.
Comparing Tariff Calculations
The difference in tariff calculations between the EU and Canada and the United States lies in their considerations. While the EU only looked at direct subsidy costs, the United States and Canada took into account factors such as subsidies, industrial over-capacity, non-market policies, as well as environmental and labor standards. This difference might explain Tesla’s attempt to negotiate a lower tariff in Canada. However, the Canadian government’s decision to impose the duty is in line with the United States’ approach.
Increasing Chinese Imports
Canada’s decision to impose the 100% duty on Chinese-made EVs comes as Chinese imports of automobiles to its largest port, Vancouver, skyrocketed by 460% in 2023. It is worth noting that these imports increased significantly after Tesla started shipping Shanghai-made EVs to Canada. Although Tesla does not disclose its Chinese exports to Canada, vehicle-identification codes confirmed that models such as the popular Model 3 and Model Y were being exported to the country.
Potential Implications for Other Automakers
The impact of the imposed tariffs extends beyond Tesla. Volvo Cars, a Swedish automaker, stated that it is assessing the effects of the increased tariffs in Canada. The company imports various models like the EX30, XC60, and a limited number of S90s from China to Canada. Similarly, Polestar, an EV manufacturer partly owned by Volvo Cars and China’s Geely, ships the Polestar 2 from China to Canada. Both companies are reviewing the implications of the new tariffs on their operations.
Possible Softening of US Tariffs
It is worth mentioning that the United States has delayed the implementation of its 100% tariffs on Chinese electric vehicles until September and there is a possibility that the planned duties might be softened. This development will be closely monitored by automakers and industry experts as changes in US tariffs could have a ripple effect on global trade dynamics.
Conclusion
The move by Canada to impose a 100% duty on Chinese-made electric vehicles aligns with the United States’ stance on Chinese imports. Tesla’s attempt to negotiate a lower tariff in Canada reveals the strategic approach of the company to navigate the changing trade dynamics. The increase in Chinese imports to Canada and the potential implications for other automakers highlight the need for careful assessment and adaptation to new trade policies. As the landscape continues to evolve, it will be essential for automakers and industry stakeholders to closely monitor developments and adjust their strategies accordingly.